Does Piracy Hinder Innovation?

Many opponents to piracy believe that piracy hinders innovation. The thought is that if “ﬁrms know that their products will be pirated, they have no incentive to innovate. For ﬁrms piracy means indeed that they won’t get any “reward” for their innovation, and that as they are experiencing a smaller amount of sales, their revenues won’t cover the R&D expenses.” (Rayna, 2004) There is no doubt that piracy, in all forms, “has increased over the past years, [yet] the ﬁrms producing digital goods remain highly innovative. What’s more [these] types of ﬁrms certainly stand among the most innovative ﬁrms. For example, Microsoft, despite piracy, keeps releasing new software.” (Rayna, 2004)

So what is Piracy Anyway?

Nobody likes having something stolen from them, and essentially that is exactly what piracy is – theft. Merriam Webster (2012) defines piracy as “the unauthorized use of another's production, invention, or conception especially in infringement of a copyright ”. The two largest supporters of SOPA and opponents of piracy are the Motion Picture Association of America (MPAA) and the Recording Industry Association of America (RIAA). Both of these organizations argue that “online piracy hold that it poses a serious threat to artistic and creative development in the world. They hold that piracy cuts into profits, reducing the amount of money an artist or programmer can expect to make, and therefore reducing the incentive for them to create new work.” (Wisegeek; 2012) The RIAA (2012) states;

What is SOPA?

There has been a lot of internet chatter recently about two proposed bills; the Stop Online Piracy Act (SOPA) in the U.S. House of Representatives, and the PROTECT IP Act (PIPA) in the U.S. Senate. (Gardner, 2012) According to supporters of the proposed legislation “the purpose of the bill is to give more power to U.S. law enforcement to fight the online selling of copyrighted materials (movies, music) and counterfeit goods (high end purses and drugs).” (Crabtree, 2011)